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    Annual Tax on Enveloped Dwellings (ATED)  and the revaluation date

    ATED is an annual tax payable mainly by companies that own UK residential property valued at more than £500,000.

    ‘Non-individual’ clients holding UK residential property who are within the charge to ATED, or who would be within the charge if the taxable value was over £500,000, are required to revalue their property at 1 April 2017, regardless of when it was first acquired or when it first came within the charge to ATED. 

    Clients with properties which were previously valued under £500,000 and were therefore outside of ATED should obtain valuations in case the value has increased to over £500,000, as ATED will then be relevant to them. A return is still needed for any affected property, even if ATED reliefs will be claimed.

    However, the revaluation only comes into effect for the ATED returns covering the period from 1 April 2018 (s102(2A) FA 2013) i.e. the returns for the year after the revaluation date. This means that the taxable value for ATED returns covering the period 1 April 2017 to 31 March 2018 continue to use the value at 1 April 2012, or the acquisition cost if acquired at a later date.

    For more information see Chapter 9 of the ATED technical guidance.

    Non-resident Capital Gains Tax (NRCGT) and interaction with s10A temporary non-residence rules

    From 6 April 2015 the Capital Gains Tax regime was extended to non-UK residents disposing of UK residential property.  

    The rebased cost of the property for calculation purposes is the value as at 5 April 2015 and only that proportion of the gain, calculated under normal rules, is chargeable to Capital Gains Tax at 18% and 28%.

    Different rules apply to temporary non-residents.  Gains arising on a property to the extent that they relate to the period before 6 April 2015 are chargeable under these rules if the period of non-residence:

    • is less than 5 years

    • before leaving the UK the individual had been resident for at least 4 out of the previous 7 years

    • the gain arises on an asset held prior to departure

    If these temporary non-resident rules apply then the portion of the gain calculated using the original base cost not charged to NRCGT will crystallise in the year of return to the UK.

    Further detailed information can be read on Gov.UK
     

    Salary sacrifice for extra holiday

    With their employers agreement, an employee can opt to take a salary sacrifice in exchange for extra days annual leave beyond their normal annual holiday entitlement.

    Employees can agree to sacrifice part of their annual salary in return for extra annual leave entitlement.  By using salary sacrifice the employer saves the amount of salary the employee has sacrificed plus the employer national insurance contributions on the amount. The employee receives extra annual leave but with a reduced net pay.

    Employees can spread the cost of the extra days over 12 months, by way of monthly deductions from their gross salary. The provision of additional holiday days is not a taxable benefit so there is no requirement to report on P11d. 

    From April 2017, the government will limit the range of benefits that attract tax and employer national insurance advantages when offered through a salary sacrifice arrangement. Holiday purchase schemes were excluded from the changes.

    To undertake a successful salary sacrifice the employment contract must be effectively varied so it is recommended that employers seek legal assistance before implementing any changes. HMRC does not give advice on salary sacrifice arrangements before they have been implemented but clearance can be sought after the implementation to confirm it is effective. 

    HMRC’s current guidance on salary sacrifice can be found on Gov.UK